The Reserve Bank of New Zealand is actively preparing a package of additional monetary policy tools to use if needed, Governor Adrian Orr said in a speech delivered to the Victoria University School of Government and Policy Studies, on Wednesday.
The package will ensure that monetary policy will remain effective and operate without undue risk, the banker noted.
He said the additional tools include negative wholesale interest rates, further quantitative easing, direct lending to banks, and ongoing forward guidance.
The central banker urged banks to use their risk models, and capital and liquidity headroom, to support their customers’ best long-term interests. “Banks need to make the appropriate risk-reward decisions that endure over time,” said Orr.
At the August meeting, the RBNZ had expanded its asset purchase programme up to NZ$100 billion and retained its key interest rate at 0.25 percent.
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